Preventing Crime Waves

Bond, Philip; Hagerty, Kathleen

doi:10.1257/mic.2.3.138

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American Economic Journal: Microeconomics: Vol. 2 No. 3 (August 2010)

AEJ: Micro Volume. 2, Issue 3 | left

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Preventing Crime Waves

Article Citation

Bond, Philip, and Kathleen Hagerty. 2010. "Preventing Crime Waves." American Economic Journal: Microeconomics, 2(3): 138-59.

DOI: 10.1257/mic.2.3.138

Abstract

We study the design of enforcement mechanisms when enforcement resources are chosen ex ante and are inelastic ex post. Multiple equilibria arise naturally. We identify a new answer to the old question of why non-maximal penalties are used to punish moderate actions: "marginal" penalties are much more attractive in the Pareto inferior crime wave equilibrium. Specifically, although marginal penalties have both costs and benefits, the net benefit is strictly positive in the crime wave equilibrium. In contrast, marginal penalties frequently have a net cost in the noncrime wave equilibrium. We also show that increasing enforcement resources may worsen crime. (JEL D82, K42)

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Authors

Bond, Philip (U PA)
Hagerty, Kathleen (Northwestern U)

JEL Classifications

D82: Asymmetric and Private Information
K42: Illegal Behavior and the Enforcement of Law

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